Real Estate Glossary
Real estate comes with its own language. I explain every term to my clients, but here is a quick reference for the words and phrases you will hear most often when buying or selling a home.
Buying Terms
Pre-Approval
A lender's written commitment to loan you a specific amount based on verified income, assets, and credit. Sellers take pre-approved offers much more seriously than pre-qualified ones.
Earnest Money
A deposit (typically 1 to 3 percent of the purchase price) that you put down when your offer is accepted. It shows the seller you are serious. It is credited toward your down payment at closing and refunded if the deal falls through for a reason allowed in the contract.
Contingency
A condition in the purchase agreement that must be met for the sale to go through. Common contingencies include inspection, financing, and appraisal. They protect you if something goes wrong.
Closing Costs
Fees and expenses paid at closing beyond the purchase price. They include lender fees, title insurance, escrow, appraisal, recording fees, and prepaid taxes. Typical range: 2 to 5 percent of the purchase price.
Escrow
A neutral third party that holds funds and documents during the transaction. The escrow officer ensures all conditions are met before the sale closes and money changes hands.
Down Payment
The portion of the purchase price you pay upfront, which is not financed. Typically ranges from 3% to 20% or more depending on the loan type.
Fixed-Rate Mortgage
A home loan with an interest rate and monthly payment that stays the same for the entire loan term.
Adjustable-Rate Mortgage (ARM)
A home loan whose interest rate can change after an initial fixed period, usually adjusted to market rates.
PMI (Private Mortgage Insurance)
Insurance required on conventional loans when the down payment is less than 20%, protecting the lender, and usually removable once you build 20% equity.
Loan Origination Fee
A fee charged by the lender for processing a new loan application.
Assessed Value
The dollar value assigned to a property by a tax assessor to determine property taxes.
Abandonment
When a homeowner leaves a property without transferring ownership, which can affect title and taxes.
Amenities
Features of a home or community (pool, gym, park access, updated kitchen) that add to its appeal and value.
Adjusted Basis
The baseline value of a property used to calculate capital gains when it is sold.
Appraised Value
A professional estimate of a property's market value prepared by a licensed appraiser.
Selling Terms
Comparative Market Analysis (CMA)
A report that compares your home to similar properties that have recently sold, are currently listed, or expired. I use CMAs to price your home competitively and accurately.
Days on Market (DOM)
The number of days a property has been listed for sale. Shorter DOM typically signals strong demand and good pricing. Longer DOM can suggest the home is overpriced or has issues.
Net Proceeds
The amount you walk away with after the sale. It equals the sale price minus the mortgage payoff, commission, closing costs, and any credits or repairs.
Multiple Listing Service (MLS)
The database real estate agents use to list and search properties. Listings on the MLS are syndicated to Zillow, Redfin, Realtor.com, and other public sites.
Listing Price
The initial asking price a seller sets for a property.
Sold Price
The final agreed-upon price a buyer pays at closing.
Asking Price
Another name for the list price a seller hopes to receive.
Seller's Market
A market with more buyers than homes for sale, generally leading to faster sales and higher prices.
Buyer's Market
A market with more homes for sale than buyers, generally giving buyers more negotiating power.
Equity
The portion of a property you actually own, equal to its value minus what you still owe on the mortgage.
Capital Gains
The profit from selling a home that exceeds your purchase price and allowed exclusions; may be taxable.
Closing
The final step of a real estate transaction where ownership is transferred and funds are exchanged.
Contingency
A condition that must be met for a sale to proceed, such as passing inspection or securing financing.
Clear Title
A title with no liens, claims, or legal issues, meaning ownership can be transferred without disputes.
General Terms
Appraisal
A professional estimate of a property's market value, ordered by the lender to make sure the home is worth the loan amount. If the appraisal comes in low, we may need to renegotiate.
Home Inspection
A thorough evaluation of a home's condition by a licensed inspector, covering structure, roof, systems, plumbing, electrical, and more. I always recommend buyers get one and attend it.
Title Insurance
An insurance policy that protects the buyer and lender against legal claims against the property's ownership. Required by most lenders and strongly recommended for all buyers.
Principal Broker / Managing Broker
A licensed real estate professional with advanced education and experience who can manage a brokerage or supervise other agents. I hold both Principal Broker status in Oregon and Managing Broker status in Washington.
Zoning
Local laws that govern how a property can be used, such as residential, commercial, or mixed-use.
Easement
A legal right for someone to use part of another's property for a specific purpose, such as utilities or access.
Lien
A legal claim against a property, often from unpaid debts like taxes or contractors, that must be cleared before sale.
Deed
The legal document that transfers ownership of real property from one party to another.
Amortization
The schedule by which a mortgage is paid off over time, splitting each payment between interest and principal.
Title
Legal ownership of a property, documented through the deed.
Notary
A licensed official who witnesses and certifies the signing of legal documents.
Multi-Family
A property with more than one separate housing unit, such as a duplex or apartment building.
Turnkey
A property that is fully renovated and ready to occupy or rent with no additional work needed.
Short Sale
A sale where the lender agrees to accept less than the amount owed on the mortgage to avoid foreclosure.
This glossary covers the most common terms, but every transaction is unique. I make sure every client understands every document and every term before signing. If you hear something unfamiliar, just ask.
Still Have Questions?
I am happy to explain any real estate term in plain language. No pressure, no obligation. Just clear answers from someone who has been doing this for 20 years.